Thursday, February 05, 2015

I try hard not to overload our Free State Foundation readers
with too many messages – and once the immediate rush surrounding the release of
FCC Chairman Tom Wheeler’s plan to adopt the Title II utility model of
regulation for Internet providers subsides, I pledge we’ll take somewhat of an
enforced breather and give you one too.

But, in the meantime, please indulge what I’ll call this “Special Edition” with a few quick
reactions to Wheeler’s
announcement of his plan in Wired
and the release of an FCC
Fact Sheet. It is important to respond to some points right now, if only
briefly. After all, in a press
statement yesterday I called Wheeler’s proposal “one of the most momentous decisions of the agency - and, undoubtedly, one
of the most misguided and likely harmful ones.”

First, Wheeler
claims that the FCC will not engage in rate regulation. But of course
the Title II classification is likely to lead to rate regulation. Understandably,
Wheeler just doesn't want to utter the forbidden words because he wants to
avoid conjuring up images of traditional public utility regulation like that
which applied to last century’s Ma Bell or the nineteenth century’s railroads.
So he's playing word games with the English language.

I predict that either immediately, or in the not-too-distant
future, the agency will regulate broadband usage tiers, ban or require
modifications to so-called zero-rating plans, and control prices for interconnecting
Internet facilities. If you think for a moment about each of these examples,
you'll realize that the effect is the same: rate regulation. Indeed, what is
banning 'paid prioritization' if not a form of rate regulation? Wheeler can accomplish
such rate regulation without actually requiring the filing of “tariffs” or agency
“rate approval” by barring any practices he considers “unjust or unreasonable”
or “discriminatory.”

If you don't want to regulate rates, why not forbear from
Section 201?

Second, Wheeler
suggests that by establishing “bright line” rules – no blocking, no throttling,
no paid prioritization – Internet providers will know what is expected from
them by the regulatory agency. The suggestion is that these “bright line” rules
will provide the certainty necessary for Internet providers to continue to
invest in building out and expanding and to innovate. Of course, even concepts
such as “throttling” and “prioritization,” in the context of what heretofore
has been a dynamic and evolving Internet, necessarily will be subject to
ambiguities leading to ongoing litigation. But putting that aside, the FCC’s
Fact Sheet goes on to say this: “[T]here must be a known standard by which to determine whether new practices are
appropriate or not. Thus, the proposal will create a general Open Internet conduct standard that ISPs cannot harm consumers
or edge providers.”

Of course, this open-ended “known” conduct standard, such as
it is, merely is an invitation into the unknown, sure to be the source of much
ongoing litigation in the future. When I was a Duke University undergraduate
decades ago, the known conduct standard, to avoid run-ins with the Judicial
Board, was “conduct unbecoming of a Duke gentleman.” Well, you get the picture.

Third, there is
what is not acknowledged, but what must be highlighted. President Obama’s
highly visible, direct intervention in this matter, with his specific urging of
the Title II utility route, looks to alter, perhaps forever, the way the FCC’s
institutional status as a supposed independent agency has been viewed and the
way the agency has operated. On this point, I commend to you a very well-done
story on the course of this proceeding on the front page of today’s WSJ by
Gautham Nagesh and Brody Mullins – “How White House Thwarted FCC Chief on Net
Rules.”Perhaps the title says
enough. But after detailing secret White House meetings and more, here is the
end of the story,: “[The President’s intervention]
essentially killed the compromise proposed by Mr. Wheeler, leaving him no choice but to follow the path outlined by the
president.”

In the context of the story, I
assume that Messrs. Nagesh and Mullins mean to say that Wheeler felt he had no
choice, as a matter of politics, but to follow the president’s direction. But,
of course, he did have a choice as a matter of law – because the president,
under the current understanding of the FCC’s independence from executive branch
control, cannot direct Wheeler’s actions.

I am not at all certain, but
perhaps at the end of the day, in this important matter involving the future of
the Internet, the law may prevail over politics.

***

Again, thanks for your
indulgence of this “Special Edition.” I can assure you it will be a cold day in
February before we again send you two Free State Foundation messages in one
day!